Trustee Confidentiality and Conflict of Interest

I. Introduction – Guiding Members of Boards in their Conduct

This paper deals with conduct of elected officials, particularly Trustees of Boards of Education. Conduct, or rather misconduct, often arises from the tension between the public duty of officials (reflected in the Trustees’ oath when they take office) and Trustees abusing their authority for personal gain or self-aggrandizement. The expectations of the courts of Trustees is found in the statement from the 1979 decision of the Ontario Supreme Court:

“Trustees, like Caesar’s wife, must be and appear to be beyond temptation and reproach….The enactment [MCIA], like all conflict-of-interest rules, is based on the moral principle, long embodied in our jurisprudence, that no man can serve two masters…Public office is a trust conferred by public authority for public purpose.” [emphasis added] (Re: Moll and Fisher (1979), 23 O.R. (2d) 609, p. 612 per Robins J.)

II. Background

Most often, when discussion arises about “conflict of interest” within public office, most people think it is dealt with exclusively by the Municipal Conflict of Interest Act (“MCIA”). They certainly would be correct in assuming that the MCIA does deal with conflicts, but these conflicts are of the pecuniary kind: are you lining your purse rather than watching out for the public purse? The MCIA allows a ratepayer to apply to court to have a Trustee removed from office for breach of its provisions. Apart from this statutory mechanism, the Education Act holds little in the way of teeth for conflict issues that arise outside of the provisions of the MCIA. As an example, there is no power in a Board of Education to remove a Trustee from office directly. Trustees become disqualified to sit as Trustees on an ongoing basis if they fail to meet the qualifications necessary – residency, lack of serious criminal conviction, attending meetings, and so on. Even though a Trustee may become disqualified and no longer be a Trustee by the terms of the legislation, the Trustees acting by majority vote have no power to remove the recalcitrant Trustee. Arguably, someone could apply to have the Trustee declared to be no longer in office. Instead, the Education Act provides a reverse process. If the Trustee has ceased to be qualified, the remaining Trustees have the obligation to fill the vacancy created. Interesting political manoeuvring happens when the Trustee in question refuses to acknowledge they are no longer qualified to hold office, and refuses to stop coming to meetings. With careful procedural manoeuvring and due regard for natural justice, Boards can fill a vacancy and sometimes gently ease the defaulting Trustee out of their position. Most often these situations deal with residency and people moving from one Board jurisdiction to another. It has been a topic of several Board resolutions within Northwestern Ontario in recent years.

When the MCIA is involved or invoked, it deals with Trustees or those near them having pecuniary interests in matters being discussed or dealt with by the Board, creating an obligation on the Trustee to disclose the pecuniary interest, avoided discussion or voting on the matter, and sometimes actually leaving a meeting if they are in-camera.

Even though this question of “declarations of conflict of interest under the MCIA” comes up at the beginning of each Board meeting where Trustees are asked whether there are any declarations of conflict, the public, and in many cases the Trustees themselves, view “conflict” in a much broader context. Instances of bias or improper purpose or motive, completely unrelated to any monetary advantage, have Trustees gnashing their teeth in meetings wondering what they can do about a fellow Trustee who appears not to have the best interest of the Board of Education at heart, but rather a desire to promote themselves, or a special interest cause.

Interestingly, in 1993 the Ontario government of the day introduced amendments to the MCIA to include a Code of Conduct that municipal bodies, including Boards of Education, could pass by by-law to create standards of conduct for the members relating to conflict of interest beyond the narrow definition dealing with monetary conflicts. The 1993 proposed amendment to the MCIA was never passed, and Codes of Conduct authorized by legislation went the way of the dodo bird. The Education Act contains nothing (beyond the declaration of the Trustee on attaining office) that defines conduct, and even then in the most general terms.

“I will truly, faithfully, impartially and to the best of my ability execute the office of Board member, and that I have not received and with not receive any payment or reward or promise thereof for the exercise of any partiality or malversation or other undue execution of the said office and that I will disclose any pecuniary interest, direct or indirect, as required by and in accordance with the Municipal Conflict of Interest Act.

The broader conflict of interest beyond the MCIA definition remains undefined by statute. Despite the statutory vacuum, senior administrators and Trustees have grappled with “misconduct” by Trustees (which varies depending on which side of the fence you are sitting on, or, beauty is in the eye of the beholder). Indeed, grappling with misconduct has been raised to an “art form” in Alberta, and especially in Calgary. The Calgary Public Board was disbanded at the request of the Minister of Education because it had become dysfunctional. In the Calgary Separate Board, a war between a determined Irishman by the name of Michael O’Malley and his fellow Trustees and senior administrators holds lessons for everyone. Closer to home, the Toronto District School Board has had its set-tos among Trustees. Many Boards of Education across Ontario are now in the process of creating an ethical code passed as a policy of the Board, with procedures arising from the policy made into a Code of Conduct. As part of the procedure, or as a practice of the Board, a toolbox of enforcement mechanisms are developed by Trustees to put teeth into the Codes.

Questions of validity of the sanctions created by Trustees are still in untested waters within education law in Ontario.

Ultimately, because the Education Act itself has no express Code of Conduct or ethical guideline expressed, nor has powers for Boards to deal with these issues directly, it has been left up to the courts to find standards and fashion remedies when Trustees fail to meet their public duties, and charge off on personal vendettas of either their own making, or from special interest groups. This paper reviews the way in which the courts have attempted to fashion remedies in the statutory vacuum for dealing with Trustee misbehaviour.

III.    Confidential Information

Some problems reoccur on an ongoing or regular basis, and misuse of confidential information by Trustees is one of those. It is particularly problematic for Trustees when they receive information in meetings that are in-camera, when that information then turns up outside the meetings and in the hands of someone who can use it against the Board or in the media, and it is supplied by a fellow Trustee. In Ontario, there are restrictions on disclosure and use of confidential information, some statutory and some judge made.

1. Municipal Freedom of Information and Protection of Privacy Act

The ability of Trustees to receive and use personal information is limited by this Act, as well as the ability to disclose the same to others. There is a broad definition of record containing personal information, and severe restrictions exist on what use can be made of personal information with consent. Of significant importance is the presumption that employment history and education history are personal information and must not be disclosed without consent as it is presumed to be an unjustified invasion of privacy. Trustees can unwittingly get themselves into situations where they receive information about the education history of a student from teachers or Principals, yet that is information they should not have, nor use or disclose. If this personal information is abused, breach of the Act can result in investigation, a finding of breach and a fine by the wrongdoer, with attendant publicity and embarrassment. A sample of the ways misuse of information can create problems for Trustees is highlighted in the fact situation attached as “A Day in the Life of Victoria Tim, Trustee”.

2. Breach of Trustees Duties and Common Law Claims

Case law states clearly that in some circumstances Trustees are fiduciaries – persons having duties of utmost good faith owed to others and imparting a high degree of trust requiring a very high standard of care. In the Calgary Roman Catholic Separate School  District No. 1 v. O’Malley, [2008] 2 W.W.R. 88 (Q.B.) per Clark J. decision, the standards of conduct for Trustees as fiduciaries were found to be set by the Code of Ethics and Code of Conduct that the Board passed. Justice Clark confirmed who a Trustee owes this duty to:

“…Mr. O’Malley had a misguided understanding of to whom his fiduciary duties are owed…Mr. O’Malley wrongly believes that his duties are owed only to the people that voted for him…the fiduciary duties are owed to the corporate body (the Board) which is, in turn, accountable to the Catholic ownership.” [para 109 – 110]

The Alberta court concluded Mr. O’Malley breached his fiduciary duty by engaging lawsuits against the Board of which he was a member, and discussing and voting on a motion to commence legal proceedings against him. By Trustee O’Malley choosing personally to engage his own Board in litigation, by attacking the Board’s core governance policies, he placed his private interests ahead of his public duty. This created an untenable conflict of interest as he had a shared public duty to advance the work of the Board in good faith and with reasonable diligence. The end result was Mr. O’Malley was in a conflict of interest at common law, and the court was entitled to disqualify him as a Trustee and remove him from office as part of the judge’s inherent jurisdiction. The test to determine if there is a conflict of interest beyond that of a pecuniary nature is this:

“The interest must be personal and substantial such that a reasonably well-informed person would conclude that it might influence the exercise of the public duty owed by that person. The interest must be more than an interest held in common with other persons of like opinion.” [O’Malley para 96 – 97]

By Mr. O’Malley voting on a motion before the Board to sue him, Mr. O’Malley had a non-pecuniary personal interest in continuing in his office which would have influenced his vote, irrespective of whether it was consistent with his public duty. In the course of concluding Mr. O’Malley breached these duties, there were several statements made that are of importance to Trustees in guiding their actions between themselves.

One case referenced dealt with an alderwoman who brought legal proceedings to quash a resolution she had voted against, but that had been passed by a municipal council. This resulted in forfeiture of her seat due to her conflict of interest. That same concept has been addressed in a School Board/Trustee context recently by the Ontario Superior Court decision in Hearst (Town) v. District School Board Ontario North East, [2000] O.J. No. 3419 at paragraphs 39 and 40:

“The individual trustees comprise the Board…The Board’s authority is exercised by the trustees making resolutions in duly convened meetings. While they are accountable to their communities, that accountability is both general and specific. From time to time, there will be a conflict between the interests of a specific constituency and the school community in general. That is to be expected. The trustees must make decisions in the best interests of the entire school community while trying to accommodate the specific constituencies. This will not always be easy. In fact, it is well accepted there will often be a minority view or position which cannot be accommodated without special measures. Should an individual trustee be unable to persuade her colleagues to accept her view and wish to ask the Courts to favour her position over the majority of her colleagues, she should resign…In answer to the vexing problems, that the trustee has limited powers of dissent if she disagrees with actions of the majority, the simple answer is that she should resign if she wishes to participate in litigation against the Board.”

The Hearst case dealt with a school Trustee who was intent on providing an affidavit to the Town of Hearst to aid them in their application to set aside a school Board decision changing the boundaries of Board representatives and the numbers of Trustees for each. It is within this context the court disapproved of a Trustee participating in litigation, even if they were not a named party.

However, do not assume from these cases that Trustees have no voice or right to object vigorously.

Courts have stated elected representatives can form views and opinions and declare themselves on issues of public interest. They have gone so far as to say:
“Elected officials are and should be entitled to maintain and forcefully to express their views without fear of disqualification or unwarranted interference by the courts. In this case, however, any reasonably well-informed person acquainted with the facts would inevitably conclude, as Justice McMahon did, that Mr. O’Malley, by attacking the validity of core governance policies through the courts, has a personal conflict of interest…that likely would preclude him from bringing an unbiased mind to the performance of his Board responsibilities.” (O’Malley decision, paragraph 104, page 23)

“Mr. O’Malley had a shared public duty to advance the work of the Board, which included deliberating on and passing a yearly budget. Yet he tried to halt the Board’s budget work, thus putting his private interest in conflict with his shared public duty to carry out the responsibilities and work of the Board…trustees collectively and individually owe a public duty to carry out their responsibilities and the work of the Board in good faith and with reasonable diligence. They are elected for that purpose. They need not be of like mind. They may hold strong conflicting views. They may debate with vigour, and occasionally with rancour. There is no rule requiring trustees to like each other. But they do have one overarching responsibility — a shared public duty to advance the work of the Board to which they had the privilege of being elected. A trustee who chooses to personally engage his Board in litigation concerning the Board’s fundamental operations places a private interest ahead of a public duty…A trustee who cannot in good conscience continue to perform that duty has a choice. He can resign his position and regain the elector’s right to challenge the Board in court. What he cannot do is remain and abandon his public duty to advance his private interest. He is unable, in those circumstances, to bring an unbiased mind to the performance of his public duty.” [emphasis added]

Interestingly, the court in O’Malley decided the appropriate remedy for breach of fiduciary duty and breach of the common law conflict of interest rules was to have the court disqualify Mr. O’Malley from holding office as a school Trustee, and to issue an order of prohibition preventing him from running in the next two elections. This was necessary as nothing short of removal from his office would deter the “unethical, unprofessional, destructive and offensive behaviour” exhibited by Mr. O’Malley.

3. Breach of Trust or Confidentiality Claims

If there is a breach of trust or breach of the duty of confidentiality by a Trustee, the remedy of a court action against the Trustee claiming what the Board has lost, i.e. an asset sale at a reduced price due to disclosure, or a disgorging of a benefit if the Trustee received something, would be appropriate. In theory this claim is an excellent remedy, but in practice often there is no loss from the disclosure of the confidential information that can be proved, but simply “misconduct” with no direct quantifiable damage. In these circumstances, a suit for breach of fiduciary duty or breach of the duty of confidentiality might be necessary, not to obtain judgment to have money paid, but rather to allow an injunction to be obtained prohibiting behaviour or actions of a similar nature in the future. Court proceedings are not for the faint of heart, and are expensive. Sometimes isolation of the offender can be as effective, and much less costly. See the next section on restrictions.

4. Restricting access to Board meetings, Committees and Board information

(i)    Chair’s authority to expel from meetings of the Board for “improper conduct at a meeting”

Section 207(3) of the Education Act gives certain powers to the Chair of meetings.

“The presiding officer may expel or exclude from     any meeting any person who has been guilty of  improper conduct at a meeting.”

Commentators have consistently interpreted this section to give a Chair the right to exclude not just the public, but also a Trustee if there is “improper conduct”. Improper conduct usually relates to conduct that affects ability of the Trustees to deliberate as they are obligated to do. Some conduct interferes with this right. Most often it is physical action such as shouting, or refusing to end a presentation. It has been suggested that in the appropriate case improper conduct could include a threat during a meeting of disclosure of confidential information by a Trustee after the meeting. In those circumstances, other Trustees may be inhibited from providing or disclosing this information, which in turn could inhibit proper decision making within the meeting. A pre-emptive expulsion by the Chair of a Trustee for a portion of a meeting dealing with those confidential matters could be upheld (see CAPSULE 1993 “School Boards: Affecting their decision” per Lauwer P.). The inhibition or restriction on other Trustees’ ability to bring forth information would be “improper conduct sufficient to expel a Trustee from a meeting”. It must be emphasized the use of this power would be most unusual, and should be exercised only in the clearest of cases. Restricting a Trustee’s right to be present, to speak and vote at a meeting, as well as the right of access to information other Trustees have access to fundamentally compromises Trustees’ common law rights. The courts will have an automatic reaction to bend over backwards to protect a Trustee’s right to attend the meeting and to access information. In those rare circumstances, proof in the clearest of terms of misuse of confidential information will be critical. Supposition as to what a Trustee might do with confidential matters would not be sufficient. In many instances, characterization by the excluded Trustee of an exclusion order as an effort to silence debate (even vigorous debate) could result in a court overruling the decision of the Chair to exclude the Trustee, at huge expense and significant adverse publicity.

(ii)    Common Law – Resolution to restrict access to attend meetings or receive information

If use of the Chair’s powers to expel or exclude Trustees from meetings is not feasible, perhaps due to claims of personality conflict or personal vendetta, or due to a need to see the Board united publicly behind its actions, courts in England have accepted there are exceptions to the general rule that Trustees are entitled to Board information equally without restriction. Case law in England frames the question as to whether the councillor or Trustee requires disclosure of the documents as reasonably necessary to enable them to perform their duties (R. v. Clerk Lancashire Police Committee, [1980] All E.R. 353 (Ch)). The prima facie rule is the Trustee has a right to see documents and information if they relate to the council he is a member of. This right can be restricted if the facts disclose some indirect motive not consistent with the interests of the Board as a whole. If this can be proved, a court will exercise its discretion and refuse to compel the local council or Board of Education to give disclosure to the Trustee or councillor. Similar statements have been made by the English courts when dealing with a Trustee’s right to attend at meetings: Does a Trustee need to attend to perform duties properly as a member? One can imagine circumstances where a Board is involved in litigation or closure of schools and some Trustees may be inclined to report in-camera meeting debate or legal opinions to the persons suing the Board. Exclusion from meetings or from provision of legal opinions might be an option, but again proper proof must be available to show the restriction is necessary. Is it more probable than not the Trustee in question will use the information he or she receives improperly and for some indirect purpose or motive unrelated to the duties as Trustee?

As a subset of the English cases accepting a Trustee can be excluded from attendance at a meeting, or restricted from accessing documents, an alternate procedure used in the O’Malley decision in Alberta was to create a committee of Trustees that excluded Trustee O’Malley. This was because of his previous improper actions. The court in that case accepted the creation of a committee to deal with matters that excluded the Trustee who was acting improperly as a reasonable and valid exercise of the powers of the Board of Education. Trustee O’Malley had disclosed labour relations information to Unions in the middle of negotiations, as well as the provision of Board legal opinions. The use of a committee to avoid Trustee O’Malley receiving that information was accepted as a valid exercise of powers of the Board. If this method is considered, care must be taken to have decisions of the Board that are taken in-camera are taken to the public session and passed in accordance with the Education Act.

(iii)    Public or Private Censure

The School Board has the power by resolution to control the conduct of its meetings, and ensure compliance with its duties under its enabling statute, the Education Act. Part of these duties is to comply with the Act and Regulations. If a Trustee has exhibited misconduct of some kind, the Board would have the ability by resolution passed by a majority to censure a Trustee. It would be important for a Board to appreciate and accept that a motion for censure of a Trustee has no actual consequence other than a declaration of disapproval by fellow Trustees. Despite this, a declaration of this nature can have practical effects:

(a)    political – the ability to be re-elected (depending on who is seen as acting properly);

(b)    you may be wrestling with a pig – to coin Mark Twain’s phrase;

(c)    this may be simply heightening the conflict and is not an appropriate method of dealing with misconduct.

Certainly, before there is a motion to censure, there should have been full opportunity to discuss the matter with the Trustee accused of misconduct, either through the Chair, other Trustees or senior administration. The concept of using up valuable political capital by alienating fellow Trustees should have been discussed prior to any public or private censure. Despite that, if the decision is made to proceed, it will be most important to have clarity in the resolution and proof of the misconduct by the Trustee. If you do not have the clarity, there may be acrimonious debate and discussion and the censure motion may fail. If this censure is public, you can expect the newspaper will likely be interested in reporting it and it would be up to the Board to defend its actions in the public forum. Failure to be able to show clear misconduct would be disastrous.

The second matter that must be examined in deciding whether to censure someone is the requirement to be scrupulously fair with regard to natural justice requirements. This would include:

• the Trustee must know the allegations being made against him or her, and his or her side of the events should be canvassed before the motion is brought;
• resolution and report of administration that supports the censure motion should be served on the Trustee, the Trustee invited to respond in writing before the Trustees make a decision;
• consideration on how the Trustee who would otherwise have a conflict of interest be allowed to present on the matter, with the proper procedure;
• ensure consideration is had on the Trustee attending and discussing/voting on a censure motion, and determining in advance what the position of the Board will be to each of these procedural quagmires;
• ensure a Board plan exists for the media scrum after the censure motion is made public. The conflict will be heightened and the Board should be ready with a spokesperson identified who knows the position that is put forward and that other Trustees are ready to have the media directed to the appropriate spokesperson. Concern for issues of defamation if matters are discussed outside the meeting should be considered. A well-drafted report by administration and clear censure motion often are enough and “speak for themselves”.

IV.    Summary and Conclusions

Dealing with misconduct by a Trustee in relation to fellow Trustees, senior administration or the interests of the Board itself is sometimes enough to try the patience of Job, and of most Directors of Education. It requires not only patience, but determination and well thought out plans of action. In many cases, political isolation of the Trustee who is misbehaving, by refusal by other Trustees to support their initiatives or attempts to provide leadership in the Board can sometimes resolve a conflict. If those less drastic courses of action are unsuccessful, it may be time to dust off this paper and put on the proverbial boxing gloves. Best of luck.

Trustee Confidentiality and Conflict of Interest